NQ Logic

Technology | Strategy | Consulting

Top 10 Days of 2009 for Technology

Year-end is around the corner, and it is usually a good time to look back and reflect on what happened.

No doubt that the year 2009 was an extraordinary (in its very literal sense) time for the world, with the biggest economic recession since World War II, topping all indicators of any nature, with the biggest stimulus packages seen over the past half century, the exceptional "too-big-to-fail" multinational corporate bail-outs, witnessing countries and cities on the verge of bankruptcy.

On a global economic scale, the consequences have been dramatic with an estimated 20-million jobs lost since the beginning of the crisis, bringing world unemployment above 200 million for the first time ever in recorded history, destroying as much as 40% of the world wealth in the last 24 months and plunging 53 million more people under the $2-a-day poverty line.

On a brighter note, America has elected Barak Obama as its 44th and first African-American president, sending a message of hope around the globe for a change in US foreign policy, an urgent global economic stability, and the will to transform the Great Recession into the Green Revolution.

The technology world was not shy either for major events in this 2009 year. Here is the top 10 game-changer days for 2009 in the technology world.

January 14, 2009: Steve Jobs Leaves Apple Temporarily

It started with an internal memo from Steve Jobs announcing that he would be taking a six-month leave of absence, until the end of June 2009, to better focus on his health. Jobs, a survivor of pancreatic cancer, had been diagnosed with a hormone imbalance which caused him to lose weight. The iconic CEO has had such an influence on the company that Apple’s stock price was following his health reports indicators. COO Tim Cook took over Jobs’ responsibilities as the temporary CEO for the six month period during which the company recorded its best quarters (Q2 and Q3 FY 2009) during the recession, and almost doubled its share price. Jobs resumed his position in June 2009.

Since Jobs re-joined Apple the first time back in 1997, he has managed to build an empire. The Apple brand (ranked #20) is the most supported within the technology industry and among the most iconic brands in the world with its easily identifiable product design and appealing functionality offerings. But a lot people fear for the company’s future without Steve Jobs at its reign. Jobs’ six-month time-off dispelled all doubts and sent the strong message that the company with Chief Designer Officer, Jonathan Ive and COO Tim Cook could also be successful without Steve Jobs at the top.

April 14, 2009: Skype Spins Off from eBay

The giant internet telephone company was acquired by eBay in September 2005 for U$2.6bn, but never managed to reach to its full potential, partly due to a software licensing dispute with the original creators. On April 14, eBay announced a public stock offering for 2010 and that it will to spin off Skype as a separate company. After some lengthy and intricate negotiations in late November 2009, all parties in the talk managed to create a separate entity in which founders Janus Friis and Niklas Zennstrom received 14% of Skype and two seats on the Board of Directors, eBay keeping 30%, and the rest being owned by outside investors (including Silver Lake Partners, Andreessen Horowitz, and the Canada Pension Plan Investment Board).

Skype, which owns all of its technology, is now an independent company and CEO Josh Silverman has his entire troop focus on growth, and no longer internal political battle. In the mobile phone industry that has been estimated by some as a one-trillion dollar industry (U$ 1,000,000,000,000) [IDC], Skype has the advantage of having an established brand, a solid technology and the operational size to take the lead over the IP migration of the telecommunication world. Skype’s IPO could be one of the most successful public offering with its double-digit growth numbers year-on-year, its U$185m in quarterly revenues (Q3 FY 2009) and its 521m active accounts.

April 20, 2009: Oracle Buys Sun Microsystems

The 20th day of April saw Sun Microsystems and Oracle Corporation announcing that they entered into a definitive agreement under which Oracle would acquire Sun Microsystems for U$9.50 a share in cash, equivalent to a total of U$5.6bn net of Sun’s cash and debt. The deal was still subject to regulatory approvals from the European Commission, but is on its way to be cleared after Oracle’s official commitment to keep MySQL alive (for the complete story, see NQ Logic’s previous "Oracle and the Sun-set").

Upon its completion, the acquisition will reshape the B2B technology landscape. The software-maker Oracle would not only enter into the high-end hardware business but also consolidate its position in the database industry with the snap of MySQL, its closest competitor. Oracle has now the technology knowledge and stack breadth to compete against IBM, HP and Cisco in the datacenter business (read in full "Data Center Consolidation").

May 26, 2009: Facebook Receives $200m from DST

Mark Zuckerberg started Facebook as a Harvard University student in 2004, and has managed to bring social relations to the internet mainstream. May 26 witnessed an important milestone for the company. Digital Sky Technologies, a Russian Venture Capitalist, paid U$200m for 1.96% of the company share, giving Facebook sufficient liquidity to materialize their vision altogether, and valuating the company at a U$10bn mark. Since then, the company has created a new class of stock, which carries additional voting power to current shareholders and Zuckerberg, similar to what Google did prior its IPO.

The now cash flow-positive social network site with its 350m users has the time needed for an IPO on its own terms, and can wait for the optimum economic conditions to try top Google’s U$1.9bn offering in 2004, the biggest internet IPO ever so far. Facebook will become public at one point in time and cannot be acquired any more by a predator or competitor.

June 15, 2009: Twitter and the Iranian Protests

Until this particular day, Twitter was following the classic path of a successful, typical internet startup with exponential growth, large media coverage and constant lack of cash. But on June 15, Twitter had to reschedule a maintenance upgrade after the US State Department asked to delay the temporary shutdown because of concerns about the service's role as a truly "unique communication medium" by the protesters in Iran. Never in the world’s history of the internet such a maintenance delay request made the front page of all news media.

Although the service only had 3 million visitors a year ago, the startup reached four-digit growth (Yes, 4 digits) with nearly 24 million monthly visits merely a year later in 2009, becoming the 3rd largest social network behind Facebook and MySpace. The 140-character text message exchanged across the planet has been used mostly by public figures (Top 5 in decreasing order: Ashton Kutcher, Britney Spears, Ellen DeGeneres, Barack Obama and Oprah Winfrey) and less public figures (NQ Logic) to talk informally about whatever they want, when they want, where they want using a simple SMS. The venture that was started as a simple online tool to answer the "What are you doing?" question changed it mission statement recently to help the Twitterers around the world answer immediately the "What's happening?" question with their 27.3 tweets a day, becoming the most important tool for mass media communication between people. The planet internet has accelerated its pace and its new rhythm is the "tweet", no wonder why Twitter is the Top Word of 2009, and could easily be named as the technology company of the year.

July 29, 2009: Yahoo! Gives Up Search to Microsoft

Microsoft and Yahoo agreed to a 10-year deal that sees Yahoo giving its search and search advertising to Microsoft’s Bing engine, while in return becoming the sales team for banner advertising for both companies. The deal saw Yahoo's share price decline more than 10%, crashing at a 60% lower mark than Microsoft's takeover bid a year earlier. The most likely deal is currently under review by the US Justice Department as it would shrink the search engine market from three large players to merely two.

Since then Microsoft Bing has gained some substantial market share in the search engine marketplace essentially from Yahoo. But the new combined entity will undeniably give Microsoft the traction necessary to understand customer behavior, helping in return to tune better their search technology to give a viable and strong alternative to the market leader Google. Microsoft has managed to capture the only the Yahoo search component they were interested in, versus the previously failed Yahoo takeover, while keeping all its cash in the bank. The battle in the ultimate search engine might happen after all.

October 1, 2009: Cisco Offers to Buy Tandberg

On October 1, Cisco Systems made an initial U$3bn offer to acquire Tandberg, the second-biggest maker of video conferencing equipment. The offer was ultimately raised to U$3.38bn after some complaints being voiced by Tandberg’s minority shareholders. By early December, Cisco managed to acquire through public tender over 90% of the Norwegian company, becoming the de facto world's leader in videoconferencing equipment. Upon approval from the US Department of Justice, the acquisition will give Cisco direct access to the lower-cost end of the videoconference market, while supplementing Cisco’s very high-end TelePresence offerings.

The combination with Tandberg would give Cisco a serious edge on its closet competitors (HP and Microsoft) in the online collaboration market, which John Chambers, Cisco’s CEO, has estimated to be worth about U$34bn. It will also help Cisco to change its client base by expanding more towards smaller businesses and even the large consumer market. With this acquisition, Cisco has decided to enter the SME (Small & Medium Enterprise) back-office market from the traffic-heavy video point of view, the higher cost in any network-centric company. Cisco’s transformation from a network equipments manufacturing company to a service provider around communication is taking another step forward with this acquisition. The U$35bn in cash and short-term investment will certainly help Cisco to materialize its 21st century vision in the coming years. More acquisitions by Cisco will certainly come.

October 22, 2009: Microsoft Launches Windows 7

Expectations were set high when Microsoft announced that Windows 7 will be released before the holiday season, and the Redmond-based company managed to deliver a stronger and more stable operating system in Windows 7 than its predecessor Windows Vista. In less than a month, Windows 7 snapped 4% of the market, a number that took Windows Vista nearly seven months to reach. It was not that its overall market share decreased to 92% that was troubling Windows and Microsoft but rather, the fact that after 3 years, Vista had not succeeded in replacing the aging XP in the enterprise and consumer OS market.

For the first time in its history, Microsoft announced layoffs this year of up to 5,000 employees in response to slow economic recovery due to the ongoing financial crisis. The unstable and unusable Vista was pointed out as a major cause of the company’s financial challenges, and its successor became the only viable alternative. Windows 7 was highly expected from Microsoft as a revenue boost, and from consumers as a technology upgrade solution. Since the release of Windows 7, which is considered by some to be the best version of Windows OS yet, it is on track to finally upgrade the PC industry and take back some of the market share lost over to Mac and Open Source. With the search engine Bing, Windows 7 seems to be the two successes of this complicated year for Microsoft.

November 9, 2009: Google Goes Mobile

On this single day, Google acquired both AdMob (a mobile advertising platform for U$750m) and Gizmo5 (a VoIP freeware company for U$30m), and became overnight the largest player in the mobile advertising industry (read full coverage "The New Google Mobile Strategy").

Google managed to secure not only the advertising distribution channel that was missing in its toolkit (mobile application advertising), but also the SIP knowledge gap that could be filled in Android, Google’s mobile OS. The next billion-dollar mobile advertising business has already been locked down by Google, expanding its reach from the 800-million PC’s on the internet, to the 4-billion mobile phones around the world.

By acquiring 3Com, HP is buying a product portfolio, and filling a gap in the core switches in the data center network, which it needed to do to be considered in large public bids. 3Com could use HP’s distribution channel and re-brand itself while HP gains a new product line, a global market share and a Chinese exposition all at once. 3Com's biggest challenges have always been brand and sales channel, but HP's brand and distribution capabilities can surmount those difficulties in this latest assault to propose a good and strong alternative (not competition yet) in the global networking equipment market to Cisco.

In these troubled times the few winners of the year 2009 in the technology space have been the large multinational companies and their multi-billion dollar acquisitions. The big corporations became bigger, acquiring more products and services, venturing into new businesses, while leaving behind their competitors. Only a handful of internet companies have managed their way up towards a hopefully better 2010, official end of the Great Recession. NQ Logic is looking forward to seeing you in 2010.